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After reporting preliminary unaudited revenues on 11 January, optical module and component maker Opnext Inc of Eatontown, NJ, USA says that, in the course of preparing its financial statements for its fiscal third-quarter (to end-December 2007), it has determined that errors occurred in the valuation of inventory consigned to one of its contract manufacturers. As a result, inventory and trade payables balances and the reported amounts of cost of goods sold and other income expense, net, were not properly reported for the fiscal years to end-March 2006 and to end-March 2007, and for the affected quarterly periods in each of those years.

Net income was overstated by about $1.8m for the fiscal year to-end March 2007 and net loss was understated by about $1m for the fiscal year to end-March 2006. In addition, net income was overstated by about $0.7m for the quarter to end-December 2006 and was understated by about $0.1m for the quarter to end-September 2006, while net loss was understated by about $0.5m for the quarter to end-June 2006.

Senior management has reviewed the errors and determined that its previously issued financial statements for the above-referenced periods should no longer be relied upon.

The firm expects to file an amendment to its annual report on Form 10-K for the fiscal year to end-March 2007 to restate the previously issued audited financial statements for the years to end-March 2007 and to end-March 2006. The firm also expects to file amendments to its quarterly reports on Form 10-Q for the quarters to end-June and end-September 2007 to restate the previously issued comparative financial statements for the quarters to end-June and end-September 2006, respectively. The previously issued comparative financial statements for the quarter and nine-month period to end-December 2006 will be restated in the quarterly report on Form 10-Q for the quarter to end-December 2007.

Opnext says it has notified the NASDAQ National Market of the review and of the expected restatements.

Pending completion of the restatement, Opnext is postponing its earnings release and the filing of its quarterly report on Form 10-Q for the quarter to end-December 2007.

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